Almira is a chocolatier with a small chocolate shop. There are three other chocolatiers in her city. Almira should be concerned that new companies will enter her city's chocolate market and take away some of her customers if the average chocolatier in her city:
A)has average revenue that is below average cost.
B)has marginal revenue that is below price.
C)is facing rising costs.
D)is earning economic profits.

Question

Quizplus · Accepted Answer

If the average chocolatier is earning economic profits, it indicates that there is room for more competitors to enter the market and earn profits as well. This could lead to more intense competition and potentially result in Almira losing some of her customers to the new entrants.

Almira Is a Chocolatier with a Small Chocolate Shop